LISLE -- Navistar International said it will sell its stake in Mahindra Navistar Automotives Ltd. and Mahindra Mahindra Navistar Engines Pvt Ltd to Mahindra & Mahindra Ltd. of India for approximately Rs. 175 crores ($33 million).
The agreement allows Navistar to continue sourcing components from India while Mahindra would continue to provide engineering services to
Both companies will become wholly owned subsidiaries of Mahindra, the company said in a release. The sale requires regulatory approval in India and is expected to be completed in early 2013.
Navistar will continue to support M&M through a license agreement and extend necessary support to the subsidiaries for the purposes of business continuity.
"Since it was established in 2005, Mahindra Navistar Automotives Ltd. has created a niche for itself in the Indian CV industry," said Dr. Pawan Goenka, president, automotive and farm equipment sectors of Mahindra & Mahindra Ltd. "The product has been well accepted as is evident from our high-ranking in the TNS customer satisfaction survey.
"We acknowledge the contribution made by Navistar to this venture thus far and appreciate their support for business continuity after they exit the business," he added.
Navstar President and CEO Troy Clarke said the Indian market had not expanded as the company had hoped.
"But given Navistar's 2013 priorities, our capital and focus needs to be allocated to other business opportunities in the near term," Clarke said. "Mahindra has extensive experience and knowledge of the Indian automotive sector and they are best situated to devote the time and resources required to capitalize on future opportunities in India."
Navistar and Mahindra entered into the joint venture in late 2005 to manufacture trucks and buses in India, source components and provide engineering services for the design and development of Navistar vehicle products. The MNEPL joint venture was formed in 2007 and began producing engines in 2010.